Request for Proposals

for Energy Efficiency

Loan Products

TECHNICAL DIFFICULTIES: CALL 919 966-4199

Webinar Topics

• Overview of Current and Forthcoming Energy Efficiency Programs in Greensboro – City of Greensboro, Duke Energy

• Greensboro Energy Efficiency Loan Product Development RFP

• Questions/Comments – Submit via chat function throughout webinar – Addressed without attribution verbally – Transcript of Q&A without attribution distributed

GREENSBORO ENERGY EFFICIENCY PROGRAM INFORMATION

Dan Curry - Manager of Community Sustainability

Denise Turner Roth- Assistant City Manager for Community Relations and Communications

Josh Mullins- Sustainability Planner/Project Manager

John Shoffner- Economic Development Manager

Steve Randall- Energy and Sustainability Manager

BetterBuildings Program

• $5 million to achieve energy efficiency upgrades to existing buildings in Greensboro

• Reduce energy consumption in residential buildings by 20-30% and in commercial buildings by at least 15%

• Target 3,400 homes and 200 commercial buildings with potential for $1 million in annual energy savings

• Create or retain up to 280 jobs

Proposed Eligible Projects (Energy Savings of 15% or Greater)

• Air duct sealing • Appliance replacement • Air sealing building envelope • Insulation • Lighting • Water heater and piping insulation • HVAC system tune-ups/repairs • New central HVAC systems • Storm windows • Solar thermal and geo-thermal hot water heating (only

after other energy efficiency upgrades have been installed) • Complimentary non-EE repairs (up to 20% of total loan)

Lending Program Goal and Strategy

Goal • Improve building performance, comfort, and health,

promote economic development, create local jobs and save City residents and property owners money and energy

Strategy • Offer financing solutions and technical assistance for

City residents and business owners that allows them to pay for EE improvements over time in a way that allows for energy savings to be sufficient to cover all or a significant portion of the loan payments

ROLES AND RESPONSIBILITIES

The City will provide:

• Program Coordination • Quality Assurance • Workforce Training • Significant Risk Reduction and Credit

Enhancement Funding • Reporting and Monitoring • Aggressive Marketing Campaign • Project Vetting • Project Engineering & Development • Loan Application and Origination Support

The Lenders will provide:

• Energy Efficiency Loans

• High level of Customer Service

• Loan Marketing

• Customer credit pre-screening services

• Loan servicing and administration

• Reporting

Update from Duke Energy

Chris Jacobi

Director, Business Development and Market Intelligence

Delta Sonderman

Marketing Specialist

OVERVIEW OF LENDING RFP

Jeff Hughes

Director, Environmental Finance Center

UNC School of Government

US Department of Energy Technical Assistance Program

Credit Enhancement Mechanisms

~$1.

5 m

illio

n Loan loss reserve fund

Interest rate buy-down

Loan pools and other forms of revolving loan funds

Goal of Credit Enhancement

• Increase size of unsecured residential loans

• Greater access to secured residential loans

• Extend loan tenors

• Lower minimum credit score for residential loans

• Reduced interest rates for residential and commercial loans

Residential Loan Product • Eligible borrowers: Residential homeowners

• Eligible properties: All existing single family homes (placed in service prior to 1/1/10) located in the City

• Loan application: Standard loan application and loan documents provided by lenders, referencing

– Building performance survey

– Contractor proposal

• Loan terms: 7-15 years, 10 years typical

• Interest rate: Market-based, factoring-in extra security by CE

Residential Loan Product, cont.

• Payment schedule: Monthly payments in arrears, level principal and interest

• Loan size: approx. $3-$20,000

• Loan underwriting and security: Proposed by lenders

• Loan disbursement and flow of funds: To be developed with lenders

• Prepayment option: Yes

Residential Lending Targets

Average project size $6,000

Average rebates and incentives ($500)

Average loan size $5,500

Total # of loans ~1,300

Total lending through 2012 ~$7 million

Commercial loan product • Eligible borrowers: Multi-family residential, retail,

industrial and institutional entities

• Eligible properties: All existing buildings (placed in service prior to 1/1/10) located in the City

• Loan application: Standard loan application and loan documents provided by lenders

– Building performance survey

– Contractor proposal

• Loan terms: 7-15 years, 10 years typical

• Interest rate: Market-based, factoring-in extra security by CE

Commercial loan product

• Payment schedule: Monthly payments in arrears, level principal and interest

• Loan size: To be determined

• Loan underwriting and security: Proposed by lenders

• Loan disbursement and flow of funds: To be developed with lenders

• Prepayment option: Yes

Commercial Lending Targets

Average project size $75,000

Average rebates and incentives ($5,000)

Average loan size $70,000

Total # of loans ~100

Total lending through 2012 ~$7 million

Loan loss reserve funds

GRANTEE Sponsors the program

or subs out

BORROWER

DOE EECBG Funds

Lender Originates & services the loans

i.e. National/local Bank, Credit Union, CDFI, Utility

LLR Escrow Accounts •Undesignated

•Reserve •Reflow

Funds to establish a loan loss reserve

Funds for interest rate buy-down if applicable

P&I payments made to the FI

Loans are originated

Funds transferred from Reserve escrow account if loans default

Loan loss reserve fund (LLR)

• Program performance examples – Pennsylvania’s Keystone Help program

Loan loss reserve funds

• First loss responsibility

• Cap of loan loss reserve fund pool

• Accommodating the portfolio “ramp-up” period

Key Clarification

The LLR mechanism is not a loan guarantee- it uses DOE grant funds to incentivize commercial lender activity by sharing risk with the partner Lenders but it does not eliminate risk for the lender. There is no guarantor in this mechanism. The liability of the City is limited to the DOE BB grant funding allocated to cover accepted losses. The Lenders are at risk for the repayment of all Loan amounts in the EE Loan portfolio in excess of the loan loss reserves provided. Therefore, prudent lending origination and administration must be maintained.

Other Authorized DOE Credit Enhancement Mechanisms

• Interest Rate Buy Down – Present value of forgone interest payments

• Revolving loan fund (DOE funds used directly as capital) – Senior/Subordinate structure

– Blended loan pools

– Clear presentation of available capital, Greensboro DOE funds required and “consumed”

Program schedule

Questions due to City 2/17/11

Answers posted 2/18/11

Proposals Due 2/24/11

FI(s) selected by the City for negotiations 3/10/11

Target date to complete LLR Agreement and Program Agreement Negotiations

3/31/11

City Council approval of LLR and Program Agreements

4/19/11

Correction

• High priority loan period (24 Months)

• April 2011 to April 2013

A successful proposal will include

• Cover letter

• Proposal

• Term sheets for applicable loan products • Details on how the FI will use the credit

enhancement to advance CE goals

A successful proposal will be

• Creative & Concise while addressing: – Terms of loans to be offered – Commentary on LLR terms – Approach to credit and underwriting guidelines – Loan marketing, origination and administration – Qualifications & expertise, officers and staffing – Collaborative services, technical assistance &

training needs – Additional statements, ideas and materials

Selection Process

• Attractiveness of the proposed Loan terms

• Financial capacity of lender

• Response to proposed loan loss reserve terms and ability to utilize this to meet the Program objectives and the objectives of the DOE;

• Feasibility and expected performance of alternative credit enhancement models

• Clarity and suitability of proposed Loan underwriting criteria

• Simplicity and ease of administration of underwriting criteria and Loan origination procedures and coordination with Program partners

• Skills of staff, services, and level of effort the Lender will provide to make this Program successful

• Ability to reach customers in the Greensboro market and

• Lender’s understanding of the Program goals and how the Lender could implement the Program.

Q & A

After this webinar:

Call Dan Curry at (336)373-2751 or

Email questions by 3pm on 2/17/11 to joshua.mullins@greensboro-nc.gov